Company Share Scheme

J

JerseyGirl

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Hi,

My employer has a revenue approved profit sharing shceme, whereby we receive a percentage of salasy in shares as a bonus, dependent on the company reaching certain targets etc. The shares are held in trust for 3 years, and after this period we can cash them wihtout any income tax liability, but are liable for any Capital gains tax.

The company is about to be bought out, for cash, and so are shares are likely to be sold by the trustees once the buyout is voted on and approved (which is highly likely). However, this means that the un-matured shares will be subject to income tax, plus CGT!!!, a hefty tax bill that takes away from much of the gains we will have made.

I am not oppossed to paying tax, and the CGT is quite reasonable, but think the income tax issues is a bit unfair, seeing as we are not really faced with any choice as the shares will be encashed!!!. (who said tax was fair, I know).

Has anyone expereince this before, or been in a similar situation ? Is there any way that the income tax can be legitemetly avoided, perhaps by defferring the cash payment to us or something ?

Any advice would be appreciated.
Thanks,
Jersey Girl
 
Don't really know the answer just guessing here, does the purchaser have a company based on shares. If so, is it possible for the trustees to buy shares in the new company.

On a slightly different issue, I take it you are aware that you are only liable for CGT on the difference between the actual price of the shares
(i.e. not including discount) and the selling price less expenses.
Don't forget to include the 1,270 that can be off set against the gain in your calculations.
 
The purchaser does have a company based on shares, but I understand this is not an option for some reason!! Could the cash be held in trust until the normall maturity date is reached ?

Has there ever been, or could there be a possibility of appealing the income tax based on the fact that it is not a release of cash by our choice, and we could have the money kept until it reaches the normal maturity date ?

Jerseygirl
 
The full rules for these schemes are available here, for all the clarity they bring ;)


The general gist on forms I've seen for this situation has been that you won't be hit for the full amount of income tax you avoided, but rather its done on a pro rata basis according to how long they've been held.
 
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